Greg Ip(@greg_ip):Random thought. It was luck that the companies best suited to building out AI happened to be immensely profitable quasimonopolists. They could finance the first leg of the buildout internally without having to meet external ROIC tests. Though they are now issuing debt, that debt is backed by the hyperscalers' non-AI cash flows, not the AI itself. In other words, the AI capex boom has been possible because the technology has never had to prove its profitability. That wasn't the case with the TMT or other prior booms, which went bust when the capex ran too far ahead of the prospective profits.

2026.09.26 19:55

Random thought. It was luck that the companies best suited to building out AI happened to be immensely profitable quasimonopolists. They could finance the first leg of the buildout internally without having to meet external ROIC tests. Though they are now issuing debt, that debt is backed by the hyperscalers' non-AI cash flows, not the AI itself. In other words, the AI capex boom has been possible because the technology has never had to prove its profitability. That wasn't the case with the TMT or other prior booms, which went bust when the capex ran too far ahead of the prospective profits.

108

Forward to community

Most Popular Users